(Bloomberg) – Indonesia is looking to speed up the Abadi liquefied natural gas project, with energy demand rising domestically and across the region, according to the head of Inpex Corp.
“The Indonesian government requests an acceleration of the project, which I understand, because Indonesia needs a lot of energy to feed its economic growth,” Takayuki Ueda, Chief Executive Officer of the Japanese oil and gas producer, said in an interview on the sidelines of the Energy Intelligence Forum in London. “We try our best, but it’s very challenging.”
In 2018, Inpex conducted preliminary front-end engineering design or pre-FEED work for the project, with an expected annual production capacity of 9.5 million tons and $20 billion in costs. A final investment decision is planned for 2027.
Abadi is “a large-scale green-field project with its risks,” Ueda said. If, after the FEED work, costs are higher and the company’s returns are inadequate, “we’ve agreed with the Indonesian government to revisit the economics of the project and maybe discuss getting more incentives from the state.”
Officials at Indonesia’s Energy and Mineral Resources Ministry didn’t immediately respond to a request seeking comment.
Indonesia is grappling with falling reserves from older projects at a time when demand for the fuel is growing.
Global LNG capacity is set to climb by about 50% by 2030 — the biggest build-out in the industry’s history. Many sector watchers expect the market to start shifting into oversupply next year, weighing on prices and further investment.
Still, “from the buyers’ point of view, diversification of the supply sources is very important,” Ueda said. “Abadi is located in the center of Asia, where the demand is. There’s huge appetite from potential customers. They need Asian LNG.”
Inpex is also planning to boost production in Norway in the next four to five years from current levels of around 25,000 barrels of oil equivalent per day. The company, which has stakes in the country’s Snorre and Fram projects, with partners including Equinor ASA and Harbour Energy Plc, recently applied for new oil and gas licenses and is looking for more partnerships.
“My target is to hopefully at least triple that production level,” Ueda said. The company is targeting overall global production at around 800,000 barrels per day after the Abadi project starts.
Inpex’s Ichthys LNG project in Australia is set “to resume operations soon, maybe in a week, to get back to full capacity probably in November” after a major shutdown for maintenance that began in August, Ueda said.
